Cutting Government IT costs by £7.2bn is central to Budget 2009

Whitehall CIOs will need to renegotiate IT procurement contracts and standardise back office functions if the Government is to hit its target of £7.2 billion in savings.

This is one of the findings from the Operational Efficiency Programme (OEP) review published today, the result of a year-long study into spending in the public sector.

The report outlines an "ambitious series of recommendations" to deliver the savings. IT is one of five strands in the OEP, which has identified a total of £15 billion of savings. The review will form a key part of Chancellor Alistair Darling’s Budget tomorrow.

Government is expected to respond to the OEP recommendations in tomorrow’s Budget, but the five advisors that have written the report believe some of these savings can be realised by the end of the next spending period.

Martin Read, a former Logica chief executive who heads up the IT and back office aspect of the OEP, called on the government to introduce better governance of IT change programmes to achieve the £4 billion of savings a year on back-office operations. Read's review also said the government could make £3.2 billion of savings a year on IT spending by following new measures.

There needs to be better management of information, benchmarking and performance reviews to measure costs, as well as better governance of IT-enabled change programmes, said Read.

Greater standardisation and simplification of IT across the public sector were amongst the key recommendations from Read. Lack of standardisation has resulted in a "cost penalty".

"Devolution of delivery can provide greater responsiveness in the provision of services, but unchecked proliferation of separate back office operations and IT systems and processes can and does lead to significant increased costs," Read wrote in the report.

Improving the track record of government IT projects could be achieved by ensuring project objectives are better defined and improving the auditing and review process.

Departmental CIOs should actively endorse all IT-enabled change projects. But if the IT project costs are above departmental budget limits, it should be elevated to the Government CIO for expenditure approval.

"There is a lack of robust and consistent management information on public sector spending on back office operations and IT, making it hard to identify what the accurate costs of back office operations and IT actually are," the report reads. "This makes it difficult to establish trends, make comparisons and manage down costs. What is not measured well, will not be managed well."

Read also suggested strengthening the existing Gateway assurance processes, by introducing 'starting-gate' reviews of all IT-enabled change projects to "prevent large-scale IT projects being initiated with a low likelihood of success".

Photo credit: Downing St

Copyright © 2009 IDG Communications, Inc.

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